Swiss inflation quickens again in kickoff to winter rebound

Inflation is rising slightly in Switzerland. © Keystone / Christian Beutler

Swiss inflation accelerated in September, marking a turnaround and likely introducing an expected rebound set to last into 2024.

Consumer prices rose 1.7% from a year earlier, up from 1.6% the previous month, Switzerland’s statistics agency said on Tuesday. The increase isn’t as pronounced as predicted in a Bloomberg survey, which had seen a median estimate of 1.8%.

The speedup was mainly due to leisure-time courses, fuel and heating oil and clothing and footwear. Underlying inflation, which strips out volatile elements like energy, slowed to 1.3% from 1.5%.

After subsiding over the summer, the Swiss National Bank and most economists expect price pressures to amplify over the coming months, setting up the gauge to touch or even cross SNB’s 2% ceiling again.

Although the central bank significantly lifted borrowing costs since last year, higher costs of electricity, rents and public transport, alongside a boost of value-added tax make for the rebound. Power prices alone are set to raise an average 18% in January.

Economists expect inflation to peak at 2% in the fourth quarter, while rate setters see it rising to as much as 2.2% in mid-2024. After surprisingly pausing its rate hikes last month, the SNB could therefore opt for another increase in December. 

Still, Swiss consumer-price growth remains the among the lowest of any advanced economy, showcasing how for a key part Switzerland’s strong currency has sheltered it from the ravages of inflation elsewhere. 

Euro-area data last week showed price growth above 4%, while based on the European Union’s harmonized measure, Swiss inflation was 2% in September.